The best mutual funds have tapped positions in the alcoholic beverages industry, buying into names like Constellation Brands, Molson Coors Beverage, Brown-Forman and Duckhorn Portfolio. They've also picked up shares in MGP Ingredients as it looks to distill a new buy point.
Showing demand for its whiskeys and other spirits, MGP Ingredients has also earned a spot on the IBD Breakout Stocks Index and IBD Stock Spotlight.
The stock sports a 98 Composite Rating, meaning it is outperforming 98% of all stocks in terms of key stock-picking traits. Molson Coors ranks No. 1, earning the highest-possible 99 rating. Constellation Brands and Brown-Forman are also highly rated. The alcoholic beverage industry ranks a solid No. 22 among the 197 industry groups IBD tracks.
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MGP Ingredients Crafts Growth With Merger, New Brands
Operating in Atchison, Kansas, and Lawrenceburg, Ind., MGP began as a humble grain-belt distillery in 1941. Today, it is one of the largest distillers of premium spirits, as well as specialty wheat proteins and starches. It partners with both small startups and global brands to create some of the finest whiskeys, ryes, bourbons, gins and vodkas in the world.
MGP's core business has always been supplying premium products to branded partners. But with eye on tapping new growth opportunities, it began creating its own limited portfolio of premium spirits between 2015 and 2020. Then in 2021, MGP acquired and merged with Luxco. Founded in St. Louis in 1958, Luxco is a leading producer, supplier, importer and bottler of branded alcoholic beverages.
With the merger complete, MGP's portfolio covers a wide range of brands in every segment. Its lineup includes Everclear Grain Alcohol, Pearl Vodka, Saint Brendan's Irish Cream, The Quiet Man Irish Whiskey and more.
Earlier this month, MGP Ingredients announced that its El Mayor Extra Añejo Port Cask Aged tequila is now available nationwide. The ultra-premium tequila has a limited allocation of 6,000 bottles.
Over the last three quarters, MGP Ingredients has generated average earnings growth of 54%. But analysts forecast a 26% EPS decline when the company reports in early August, leading to a 5% slowdown in full year profit growth.
Sales growth has been impressive, ranging from 65% to 89% over the last four quarters. Boosted by a strong annual return on equity and pretax profit margin, MGP Ingredients earns an A SMR Rating in Stock Checkup.
MGPI Stock Taste-Tests New Breakout
As the market indexes hit resistance before and after Wednesday's inflation report, MGPI stock eyes a 104.10 buy point it briefly cleared on July 5. Its relative strength line remains within striking distance of a new high.
Despite the hot inflation news, MGP Ingredients came off its lows for the day, rebounding to a 2% gain in below-average but rising volume.
Note that the new potential buy zone is right around the all-time high the stock hit in March 2019 before entering an extended slump. Next month's earnings report and current market volatility will put that level of resistance to the test.
See if MGP Ingredients can punch through that ceiling of resistance in strong volume. A breakout to a new high in volume at least 40% above average would help confirm demand for the stock that has already made the list of new buys by top funds.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
